Are you making the most of Fuel Tax Credits?
TurnKey Management has helped businesses in the transport and logistics sectors accurately calculate and recover tens of thousands of dollars in Fuel Tax Credits - helping to significantly reduce their operating costs.
Read on for our helpful guide to Fuel Tax Credits, including eligibility criteria and how you can get started claiming your entitlements.
What are Fuel Tax Credits?
Fuel Tax Credits provide businesses with a credit for the fuel tax included in the price of fuel used in machinery, plant & equipment; heavy vehicles on both public and private roads, and light vehicles on private roads or property only, such as depots and mine sites.
Your business may be entitled to receive Fuel Tax Credits if any of the above applies to you.
Accurately determining your full entitlement can be a complex process. Our experience shows that the complexity and lack of understanding of Fuel Tax Credits leads to widespread under-claiming of Fuel Tax Credits, and in many cases, companies not claiming at all.
Who is eligible for Fuel Tax Credits?
To make a claim for Fuel Tax Credits you must be registered for:
GST when you acquired the fuel, and
Fuel Tax Credits when you lodge the claim.
What fuels and activities are eligible?
Eligible fuels include all fuels on which a fuel tax has been levied. You may claim Fuel Tax Credits for eligible liquid or gaseous fuels as listed below:
LIQUID FUELS
Eligible liquid fuels are:
Petrol,
Diesel,
Kerosene, and
Other liquid fuels, biofuels etc.
Fuel blends are also eligible for Fuel Tax Credits, with the rate you can claim dependent on the percentage of ethanol or biodiesel in each blend. Fuel used in light vehicles is only eligible on private roads or property.
GASEOUS FUELS
From 1 December 2011, eligible businesses are able to claim Fuel Tax Credits for gaseous fuels used in their business activities.
Gaseous fuels are:
Liquefied petroleum gas (LPG),
Liquefied natural gas (LNG), and
Compressed natural gas (CNG).
Transport Gaseous fuels are duty paid and include:
LPG or LNG intended for use in an internal combustion engine of a motor vehicle or vessel (boat etc.), either directly or by filling another tank connected to such an engine,
CNG that is imported or compressed for use as a fuel in a motor vehicle, and
All gaseous fuels for mixed use (that is, both transport and non-transport use) or when the end use is unknown.
How a Perth-based Transport Company Increased its Fuel Tax Credits Claim by over 84%
If your business is eligible, an effective Fuel Tax Credits calculation can provide substantial returns.
In a recent Fuel Tax Credits audit undertaken for a Perth-based transport company, TurnKey Management was able to increase the company’s FTC claim by over 84%.
This resulted in the company realising tens of thousands of dollars in additional returns compared to its pre-FTC audit claim.
The methodology and calculations used to make this additional claim were compliant with the ATO’s FTC guidance, and reference was made to the ATO’s previous claims for FTCs on a similar basis.
Current fuel excise cuts and temporary freeze on Fuel Tax Credits
As part of the Federal Government’s 2022 Budget, the Morrison Government halved the excise on fuel. This came into effect on 29 March 2022 passing on a saving of $0.221 per litre of diesel or unleaded fuel.
If you make a claim for Fuel Tax Credits for fuel purchased from 30 March 2022, a lower FTC rate will apply until the temporary relief ends on 28 September 2022.
During the temporary rate reduction period, businesses using fuel in heavy vehicles travelling on public roads won't be able to claim Fuel Tax Credits. This is the result of the claimable part of the excise paid being reduced to nil.
Why are fuel prices so high?
Fuel prices have dramatically increased in the last six months, impacting households and Australian businesses alike. For eligible businesses, this has made it crucial to diligently manage their Fuel Tax Credits.
The average retail petrol prices in Australia’s 5 largest cities soared to an eight-year high in the first quarter of 2022. The Russian invasion of Ukraine, post-COVID oil demand and reluctance of the OPEC cartel to increase oil production are the main factors affecting historically high prices.
“The world was already experiencing high crude oil prices late last year due to the continuing actions of the OPEC and Russia cartel, and the enduring Northern Hemisphere energy crisis. The shocking events in Ukraine have forced crude oil prices even higher, as Russia is a major supplier of oil,” ACCC Chair Rod Sims said.
“Retail petrol prices in Australia are largely determined by international refined petrol prices and the Australian/US dollar exchange rate. As refined petrol is made from crude oil, movements in the global crude oil price drive the international price of refined petrol.”
TurnKey Management’s Fuel Tax Credit Solutions
With global supply chain issues expected to continue and no relief on fuel pricing in sight, now is the time to implement a comprehensive methodology for your organisation’s Fuel Tax Credits.
By starting this process now, you can equip your business with an effective FTC calculation method in time for FTC claims reinstatement, making the most of the excise cut before it’s lifted.
The team at TurnKey Management can assist you with developing and implementing this process, ensuring you’re getting your full entitlement through comprehensive and compliant Fuel Tax Credit calculations.
Reach out via the contact form below for an obligation-free meeting to explore your options today.